National Debt

imoldernu said:
I don't see this as a controversy, but more of a matter of understanding just what the debt represents, who owns it, how it can changes, and gains or losses value as regards the person, country or entity owning the debt.

Digging in to this could allow a smart investor to see early warnings... not necessarily negative, but how the debt value may change. The Chinese/US relative debt ownership study, goes far beyond the two countries, and can be affected by seemingly distant activity in trade and debt owed to many other countries.

Some of the long term projections by international financial analytics have proven remarkably accurate. More to this than earnings or corporations plans that we look for in stocks.

A good example is the rapid and not well understood changes in population, as well as pending changes in the economic stress actions in countries such as Greece and Ireland.

A lot more than what I could understand after an hour or so reading about US/China Debt. While it all seems far off, once started,there is a chance that everything could move quickly.

#7 on the worry list. :)
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China holds a little over 5% of our national debt. The "China Owns Us" canard is just that. If China sold U.S. Treasuries en mass, the dollar would fall and China's exports to us would crash - that's not going to happen any time soon.

Here's a good discussion: https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

And: https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

Bottom line is most of the national debt is to American citizens and institutions. That fact doesn't mean the debt is not a problem, interest on the debt is growing and consuming more and more of the Federal budget.
 
USGrant1962 said:
.

Here's a good discussion: https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

And: https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

Bottom line is most of the national debt is to American citizens and institutions. That fact doesn't mean the debt is not a problem, interest on the debt is growing and consuming more and more of the Federal budget.
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Yes... and the websites are excellent, if long, in explaining the entire web of debt where every thread connects. To get through the maze, probably two or three hours of concentrated learning. A good shortcut to see early warning, is to watch any changes to the Fed interest rates, and the speed at which the market reacts. ie... for example any talk of the fed changing rates, that causes the market to change by more than 1%, could be a clue for neartime volatility.

Still, keep an eye on debt changes in foreign markets.

Yes... maybe doubletalk, but these are not stable times. "The Balance" is a good site for plain talk about finances.
 
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USGrant1962 said:
Bottom line is most of the national debt is to American citizens and institutions.
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That feels significant, though I don't know how to express it. When a country borrows from other countries, think Greece, the lenders gain a big say in how the borrower's country is run. In the US much of the debt it owned by US citizens, who at least in theory already control the government.
 
stepford said:
Before everyone piles on to either counter or support this position, let's note that BOTH sides have their own preferred methods of debt reduction that are strongly resisted by the other side. While we all certainly have our own partisan views, they are not germane to this discussion.
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Agree. If I wanted to read posts like this I'd open a Twitter account
 
Markola said:
So let me get this straight. This article indicates that tax cuts do not, in fact, pay for themselves. Darn it, just when you let yourself believe there’s a free lunch...
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Yeah, we always know that’s baloney, and even the analysis at the time demonstrated that they wouldn’t, but for some reason the powers that be use it (promises, promises) for justification whenever they really want that tax cut!!! It’s magic!
 
Markola said:
So let me get this straight. This article indicates that tax cuts do not, in fact, pay for themselves. Darn it, just when you let yourself believe there’s a free lunch...
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I don't think it's enough to put more money back into the pockets of people. To have the desired economic impact, that money needs velocity in the economy -- it needs to exchange hands through commerce, generating income for labor and creating taxable transactions.

Giving someone a massive tax cut will not do a thing for the economy by itself. It will not generate more taxable economic activity, if that money is simply hoarded as if it were being buried under a barn or stashed under a pillow. Giving large tax breaks to people who already have more money than they can spend is more likely to result in hoarded wealth, not more taxable economic activity. I am not speaking to the politics or the ideology of doing so, just stating that it will not have the "advertised" economic effect.
 
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While I worry about the national debt, I worry even more about our nations unfunded liabilities. That is the amount of money already owed or promised to American citizens but without the funds to fulfill those obligations.

Recently, I read that number was up to $122 TRILLION!! Much of those 'future obligations' are social security and Medicare benefits that many of us younger FIRE'd folks included in our FIRE calcs. So I get nervous when no political party seems to want to do the right thing and attempt to address this issue.

https://www.realclearpolitics.com/a...ovt_liabilities_--_our_ticking_time_bomb.html
 
kite_rider said:
So I get nervous when no political party seems to want to do the right thing and attempt to address this issue.
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That's not completely true. See "Social Security 2100 Act".
 
kite_rider said:
While I worry about the national debt, I worry even more about our nations unfunded liabilities. That is the amount of money already owed or promised to American citizens but without the funds to fulfill those obligations.
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What is most important is Exactly who told you to worry about that?
 
kite_rider said:
While I worry about the national debt, I worry even more about our nations unfunded liabilities. That is the amount of money already owed or promised to American citizens but without the funds to fulfill those obligations.

Recently, I read that number was up to $122 TRILLION!! Much of those 'future obligations' are social security and Medicare benefits that many of us younger FIRE'd folks included in our FIRE calcs. So I get nervous when no political party seems to want to do the right thing and attempt to address this issue.

https://www.realclearpolitics.com/a...ovt_liabilities_--_our_ticking_time_bomb.html
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I searched the article for the letters "GDP". I didn't get any hits. Assuming the "$122 TRILLION" is the present value of some future amounts, do you have any idea of what that is compared to the present value of future GDP?
 
Cut-Throat said:
What is most important is Exactly who told you to worry about that?
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Why? Myra Adams? Can't say I know her or much about her other than what is at the end of the article. I've read a lot of similar things on a website by the Peterson Foundation. They seem to be interested in this sort of thing and not obviously biased towards one political party or the other.

I think 'what is most important' is to make sound financial policy that is sustainable in the long run so that my kids and their grandkids are not thrust into a financial crisis due to the shortsighted policies of the current period.
 
kite_rider said:
Why? Myra Adams? Can't say I know her or much about her other than what is at the end of the article. I've read a lot of similar things on a website by the Peterson Foundation. They seem to be interested in this sort of thing and not obviously biased towards one political party or the other.
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I thought so. Just spend about 10 minutes googling their background and you'll have all the answers you need... BTW - Peterson Foundation is Pete Peterson - Who is dead now BTW.
 
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Independent said:
I searched the article for the letters "GDP". I didn't get any hits. Assuming the "$122 TRILLION" is the present value of some future amounts, do you have any idea of what that is compared to the present value of future GDP?
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Is there some magic debt to GDP ratio that all of the sudden changes everything for you? I'm not sure how to read your comment.

I've got an idea, if that is what you are really asking... if existing debt / GDP is over 100% already and we have about $22T of debt now. Then it appears that we've already made promises for an additional $100T of spending that is not funded. Assuming our economy can grow at 2.5% per year our GDP would take over 27 years to double. So if nothing changes, you can conclude that our debt to GDP ratio will increase rapidly in the future. Actually, according to the CBO in "The Budget and Economic Outlook: 2019 to 2029" from Jan of this year they project Debt to GDP to be 147% in 2049. So there you go..

The whole point of my original comment is was that while the existing national debt is a large number; the combination of changing demographics, increased health care costs, and federal policy that consistently operates in larger deficits will make the current debt look small by comparison.
 
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Cut-Throat said:
I thought so. Just spend about 10 minutes googling their background and you'll have all the answers you need... BTW - Peterson Foundation is Pete Peterson - Who is dead now BTW.
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Hmmmmm, maybe you should spend 1 minute googling the "Peterson Foundation"? You will be enlightened to find that it's much more than Pete Peterson. Or maybe you think his ghost is doing all the recent work:confused:?

Any thoughts or comments about the national debt and the related unfunded liabilities of your own??
 
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kite_rider said:
Is there some magic debt to GDP ratio that all of the sudden changes everything for you? I'm not sure how to read your comment.

I've got an idea, if that is what you are really asking... if existing debt / GDP is over 100% already and we have about $22T of debt now. Then it appears that we've already made promises for an additional $100T of spending that is not funded. Assuming our economy can grow at 2.5% per year our GDP would take over 27 years to double. So if nothing changes, you can conclude that our debt to GDP ratio will increase rapidly in the future. Actually, according to the CBO in "The Budget and Economic Outlook: 2019 to 2029" from Jan of this year they project Debt to GDP to be 147% in 2049. So there you go..

The whole point of my original comment is was that while the existing national debt is a large number; the combination of changing demographics, increased health care costs, and federal policy that consistently operates in larger deficits will make the current debt look small by comparison.
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I read that number was up to $122 TRILLION!! Much of those 'future obligations' are social security and Medicare benefits ... no political party seems to want to do the right thing
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SS hasn't contributed a single dollar to our current debt - SS has been funded entirely by earmarked taxes. The point of asking for the ratio is to get a feeling for how big the
future problem is in terms that make sense - which would be percent of the future economy. The SS part happens to be 1.3% of the pv of future GDP. https://www.ssa.gov/oact/tr/2018/VI_F_infinite.html

It's wrong to say that "neither party" wants to address SS. The chairman of the House subcommittee on SS submitted HR 860, "Social Security 2100". 204 members of the House have already signed on as supporting this bill - they only need 14 more supporters to get over 50% of the House. https://www.congress.gov/bill/116th-congress/house-bill/860
(FTR, I don't think that SS 2100 is the best solution for SS, but it is a serious proposal with numbers that actually add up)

I think the deficit/debt are serious problems. But, the problem is here today. We're spending $1 trillion dollars more in 2019 than we collect. That money goes to the military, and Medicare, and veterans benefits, and Medicaid, and ...
Taxes aren't covering it partially because we just cut tax rates again.

I'll agree that neither party is addressing that problem.

I'd support any candidate that has proposals to cut spending without cutting taxes, or increase taxes without increasing spending, or to both increase taxes and cut spending.
 
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Independent said:
The $122 TRILLION "unfunded liabilities" is future SS and Medicare. SS hasn't contributed a single dollar to our current debt - SS has been funded entirely by earmarked taxes. The point of asking for the ratio is to get a feeling for how big the problem is in terms that make sense - which would be percent of the future economy. The SS part happens to be 1.3% of the pv of future GDP. https://www.ssa.gov/oact/tr/2018/VI_F_infinite.html

It's wrong to say that "neither party" wants to address SS. The chairman of the House subcommittee on SS submitted HR 860, "Social Security 2100". 204 members of the House have already signed on as supporting this bill - they only need 14 more supporters to get over 50% of the House. https://www.congress.gov/bill/116th-congress/house-bill/860
(FTR, I don't think that SS 2100 is the best solution for SS, but it is a serious proposal with numbers that actually add up)

I think the deficit/debt are serious problems. But, the problem is here today. We're spending $1 trillion dollars more in 2019 than we collect. That money goes to the military, and Medicare, and veterans benefits, and Medicaid, and ...
Taxes aren't covering it partially because we just cut tax rates again.

I'll agree that neither party is addressing that problem.

I'd support any candidate that has proposals to cut spending without cutting taxes, or increase taxes without increasing spending, or to both increase taxes and cut spending.
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+1
 
I’ve found this to be very interesting regarding national debt numbers.

U.S. National Debt Clock : Real Time

A little difficult to read, but take some time with it and it makes sense.
 
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